An actual lease will be written up by April 15, but many of the terms are already in place: The Kings get all basketball revenue, including concessions during Kings games; arena operators AEG get all naming rights money and ad signage revenue, plus all revenue from non-Kings events except for 12 "city events" per year. (The city will get a cut of AEG revenues, as discussed yesterday.)

AEG gets to tack on its own "capital repair fee" of $1 per ticket to pay for future capital expenses.

The Kings get all parking revenue from city-owned lots the nights of Kings games. If that number falls short of $2,640,000 a year, the team can withhold ticket-surcharge money to make up the difference, assuming that there's at least $1,100,000 in the ticket surcharge pot that year.

The city will build (or more likely, get a private developer to build) a VIP parking facility for, you know, VIPs.

The city will refinance the Kings' existing debt, but it's not clear on what terms or with what collateral, though there's mention of a "lockbox mechanism to capture revenues to pay annual debt service," which would imply that the city would get first dibs on arena revenues to repay its loan.

The city gets a free suite to use for "any official City purpose."

The 5% ticket surcharge won't apply to luxury suites for Kings games, but will apply to suites for non-Kings events when there's a separate ticket fee.

The Kings would make a binding commitment to remain in Sacramento for the next 30 years.

Power Balance Pavilion would be required to be demolished so as not to compete with the new arena. (It would already pretty much have to be demolished so the land under it could be sold to help pay for the arena, but the tem sheet requires it to be shut down regardless.)

The city council will need to vote by April 3 to spend $6.5 million on "engineering, environmental and other costs," according to the Sacramento Bee, with the Kings and AEG kicking in an equal amount.

Nothing that I can see, though, on precisely how the $9 million in future lost city parking revenues would be made up (the Bee helpfully suggests "ticket surcharges, taxes generated by the arena, the city's anticipated share of arena profits and" — wait for it — "other sources"), or, for that matter, how the city expects to get $230 million from selling parking revenues that won't include anything on Kings game nights (since the Kings will get those) and will be reduced on other arena event nights (since the city is counting on a cut of that to help repay the $9 million a year). "City staffers are still wrestling with exactly how to make the parking plan pencil out," writes the Bee.

In all, the term sheet reads like exactly what it is: a half-finished framework for a deal that was cobbled together in order to make an arbitrary deadline, with the hopes that all the blanks can get filled in later. The biggest question mark, really, is those parking revenues: If the city can really find a buyer (or a bank willing to loan with the parking money as collateral) who'll pay top dollar for lots with arena event nights carved out, then the deal should work — not necessarily work in a way that's good for Sacramento's treasury overall, but at least the numbers will match up. If not, we could see this thing explode spectacularly over the next few months, with the requisite resulting scramble for dollars to fill in the gap, and probably renewed threats of moving to Seattle and such. It's never over until it's over.

Yeah, I like how the City is still thinking about how to raise the $256M.

The existing debt will prove to be an issue, I think. It seems really foolish to not require that debt to be settled first. Otherwise, you get 3 years into it, and "For technical reasons, the Maloofs cannot restructure this debt, so the City needs to either come up with the money or watch the Maloofs go bankrupt."

I don't think these surcharges will get past Prop 26 requirements, either.

Posted by MikeM on March 2, 2012 01:15 PM

Hehehe, the Kings get all revenue from city-owned lots on days the team is playing.

Get ready to pay up fans! You deserve to get fleeced. I hope it's like $40 bucks a game. I only feel sorry for people who need to go to the city for other reasons though.

Posted by Roger C. on March 2, 2012 04:46 PM

Who covers the cost overuns?

Posted by Roberto on March 3, 2012 02:21 AM

Is bankrupt Bank of America the lender? Who on earth would fund this thing? They better get a deal before the stock market rolls over. I can't see anything remotely close a risk like this with housing prices (property taxes) still tanking and incomes/employment stagnant. I don't think American's are ready to live in the real world yet, but what do I know. I hope the lender's security isn't like our drinking water supply or something else!

Posted by William on March 3, 2012 01:21 PM

If I were giving away parking revenue to a private monopoly, I'd make sure that parking was $1. Thanks for referencing the arbitrary deadline. That deadline is pure BS to a real negotiator. Then again, the cities never really hire a real negotiator with clout. It would make it impossible to give away your money.

Posted by Cujo on March 3, 2012 07:02 PM

When I read the 45 page term sheet I also concluded there wasn't enough parking revenue left to generate the $250M needed from a parking deal. Thanks for giving me hope this deal might blow-up.

One point I think should be included. The city is paying half the cost of the VIP parking lot. This comes from existing funds allocated for downtown redevelopment. Cost to city $25M. I believe this amount not included in $265M contribution.

Posted by Jennifer Soloway on March 4, 2012 04:09 PM

When I read the 45 page term sheet I also concluded there wasn't enough parking revenue left to generate the $250M needed from a parking deal. Thanks for giving me hope this deal might blow-up.

One point I think should be included. The city is paying half the cost of the VIP parking lot. This comes from existing funds allocated for downtown redevelopment. Cost to city $25M. I believe this amount not included in $265M contribution.

Posted by Jennifer Soloway on March 4, 2012 04:10 PM

Interesting article here, where they talk about how they haven't settled on a design for this yet.

Read their comment in the graphic how the arena and AMTRAK will be able to share the pedestrian tunnel between the train station and the platforms. Um, share it for what? The arena is proposed to be placed directly on this tunnel.

(That's just one of the many fun facts in this article.)

Not shown in the graphic: The I Street onramp to I-5 South is single-lane. I just don't see where that will cause a problem. Anyone else?

(Being sarcastic now.)

I-5 South is the main way for people to get to US-50 West and East, and also towards the Arden area as they get back to the "29-30th". Probably about half the cars leaving the arena will want to go this way.

AEG kicks in $59M and gets $5.7M/year; Sacramento kicks in $256M and gets $1M back (MAYBE).

Of course AEG likes the deal. Is there some other answer they'd give?

Posted by MikeM on March 5, 2012 12:10 PM

The Bee doesn't do economic analysis. They have been cheerleading this project every step of the way. They've given some space to arena opponents but the columnists and reporters on the Bee staff have brushed away every argument against the arena- sometimes arrogantly.

And MikeM, you're right. This arena ain't gonna fly with the current freeway access to the area. I wonder how much this will cost and I wonder if the state will make this a priority proejct.

Posted by jjo916 on March 5, 2012 01:50 PM

The Bee doesn't do economic analysis. They have been cheerleading this project every step of the way. They've given some space to arena opponents but the columnists and reporters on the Bee staff have brushed away every argument against the arena- sometimes arrogantly.

And MikeM, you're right. This arena ain't gonna fly with the current freeway access to the area. I wonder how much this will cost and I wonder if the state will make this a priority proejct.

Posted by jjo916 on March 5, 2012 01:51 PM

jjo916, the article I referred to on March 4 explains that they can't do much about it. That's the "boat section."

That freeway onramp is what it is. They'll either have massive crowds going down 10th Street (which is partly residential) or using that one-lane onramp at the end if I Street.

It's not good.

Great meeting on March 4 at a local high school. I can relay parts of it to you if you'd like, Neil.

Posted by MikeM on March 5, 2012 08:14 PM

I've read the Terms Sheet and here are my takeaways. The expected vote Tuesday night will be 7-2 to proceed further although it is non-binding and not final. Basically they are voting to waste another $850,000. None of the participants are putting up any equity money. All are borrowing against their share of future parking revenues, ticket surcharges or naming rights. The only party taking on risk is the city. A quick calculation shows that given a $10M/yr net parking cashflow escalating 5% per year for 25 or 50 years will only produce a monetized value of $100M if the operator demands a 15% IRR. That's a long way from the needed $230M. The backfill revenue sources are purely speculative and not guaranteed. The project costs have been deliberately underestimated excluding offsite infrastructure costs. The collateral to refi the existing loan is insufficient because they need a loan of $75M but the property is only worth $20M. There is no money for the intermodal station and the site is too tight. So, to me it's "game over" for Team KJ but it looks like we'll have to endure another few months of drama.

Posted by Cal on March 5, 2012 10:57 PM

The Sacramento City Council voted 7-2 to proceed on the term sheet. The business community and labor put on a good show during the Council meeting. If only they could come up with some concrete ideas to fill the hole in the City Budget, avoid gouging workers and residents who pay for parking, and to build this Arena in the most environmentally friendly manner as possible.